Published by WallStreetWeather.net
After starting the day in the red on Thursday, the major indices briefly turned positive early in the session before reversing and moving lower as the day progressed. The selling began to accelerate in the early afternoon, when fresh riots broke out after the Greek parliament passed the austerity measures as a condition for receiving a bailout from the EU and IMF.
The Dow went from being down around 135 points just before 1:30 PM to down 244 points an hour later. By 2:40 PM, the Dow was down 435 points, the Nasdaq120 points, and the S&P500 had declined 51 points. Five minutes later the Dow was down 998.50 points to 9,865 – its biggest point drop ever recorded before making a V-shaped recovery. After swinging 1,010.14 points between the high and low, the Dow closed down 347.50 points to 10,520.32. The Nasdaq closed down 82.65 to 2,319.64, and the S&P was down 37.72 to 1,128.15.
Beyond the fear that Greece’s debt problems could spread to other countries in the Eurozone and impact the banks holding their debt, a trading error is being attributed to the market’s rapid mid-afternoon plunge that immediately triggered a wave of sell orders across the market. Gossip began circulating that a Citigroup trader hit the wrong key and ended up executing a sell order for $16 billion instead of $16 million S&P E-mini futures contracts, even though Citi confirmed it did not trade more than $9 billion E-minis the entire day.
The Nasdaq announced after the close Thursday it reversed trades executed between 2:40 and 3:00 PM involving 286 securities that moved 60% or more from the level they were trading at just before 2:40 PM. A handful of these stocks had dropped to a penny during those 20 minutes due to a lack of corresponding buyers for all the computerized sell transactions. Shares of Dow component Proctor & Gamble (PG) dropped 37% during that time. The SEC and the CFTC announced they would be reviewing the “unusual” trading activity that occurred then.
Mercury rules communication, movement, and commerce. When Mercury is retrograde (April 18 to May 11), there is an increased potential for communication glitches and mental errors. Financial markets tend to become more unpredictable, diverting from previous trading patterns and support/resistance levels. Mercury retrograde in Taurus emphasizes money, banks, and valuations. Markets were disappointed after ECB president Trichet said that buying government debt was not discussed at the central bank’s policy meeting yesterday morning.
Mercury retrograde periods bring a return to past events and circumstances. Media reports began comparing the Greek drama to the large point declines in early fall 2008 when Mercury was retrograde in Libra which created a financial crisis after a loss of confidence in counterparty risk. There are concerns that U.S. banks could have counterparty risk with the French and German banks heavily exposed to Greece’s debt.
Yesterday the VIX saw its biggest percentage jump since the September 29, 2008 Libra New Moon when the Dow dropped 778 points after the House failed to pass the TARP bill. At that time CNBC kept showing their reporters standing in front of banks as they speculated “who’s next?” Yesterday the network kept replaying video of the rioting in Athens while speculating how far the sovereign debt crisis would spread.
Mercury rules the chart set for 2:40 PM yesterday and is located in the sector representing debt. The yield on the 10 year note dropped to 3.27% before closing at 3.401%, its lowest level since early December as investors swapped equities and commodities for U.S. debt.
Taurus is ruled by Venus, and Venus is in Mercury-ruled Gemini. Although Mercury rules the hands, it is unlikely that a “fat finger” trade was the sole cause. Saturn in Mercury-ruled Virgo ruling the sector of the stock market in the chart and residing in the sector of the chart representing prevailing attitudes indicates a lack of enough buyers in the exchanges where activity was taking place.
The Moon represents the mood of the market. The Moon in Aquarius can exacerbate the influence of Mercury retrograde as Aquarius and its planetary ruler Uranus represent what is unusual and unpredictable. The Moon in Aquarius in the sector representing the workforce and conjoining Neptune in Aquarius (unions) reflects the extreme behavior of the protestors in Greece since the Moon entered Aquarius Tuesday evening.**
Aquarius/Uranus rule electronics and technology. The Moon conjoining Neptune not only reflects the confusion over exactly what kind of electronic trading was behind the plunge, but it further confirms that buyers had disappeared.
The cycle the Moon is in influences markets, and yesterday the Moon was in the last quarter phase of the Aries New Moon cycle. Aries is ruled by Mars which was squared by the Sun and opposed by the Moon, indicating that volatility would accelerate. Mars in speculative Leo opposite the Moon in Aquarius draws attention to high speed electronic trading.
Yesterday a series of contraparallels** occurred between the Moon and Mercury, Mars and Pluto, and Jupiter and Saturn. Mars is fast, which can be either active buying or selling. Mars/Pluto raises the potential that manipulative behavior by a hedge fund or other organization might have begun yesterday’s meltdown which was accentuated by sophisticated traders choosing speed optimization over price optimization. Mars/Pluto tends to be a bearish influence and denotes aggressive behavior. Together with the Last Quarter Moon in Aquarius, the actions of a few youthful anarchists resulted in the death (Pluto) of three bank (Mercury in Taurus) employees. Pluto in Saturn-ruled Capricorn represents sovereign debt.
Jupiter exaggerates market moves as authoritative Saturn attempts to retain orderly control of the situation. Jupiter/Saturn reflected the imbalance at the NYSE between buyers and sellers. The NYSE purposely slowed down trading due to limited liquidity in certain issues. This led to execution optimizing traders to bypass the NYSE and execute on less liquid venues. Blue chip stocks briefly traded at fire sale prices.
The Wall Street Journal estimates that high frequency trading firms account for around two thirds of overall market volume. Saturn represents rules and boundaries which Uranus likes to unexpectedly break through. Cautious Saturn opposing volatile Uranus can represent electronic trading systems that malfunction/shutdown after the market breaks through a certain level. The Journal reports several high frequency trading firms have rules to stop trading when market conditions become “weird.” Saturn opposed Uranus April 26. The previous oppositions (November 4, 2008 and February 5, 2009) brought high volatility and sharp and record breaking price moves that brought the market to multiyear lows while the September 15, 2009 alignment was far more benign.
The April 14 New Moon conjoined the NYSE’s natal Saturn in Aries, indicating that equities would be under pressure. The New Moon squared and reactivated the influences of the January 15 Solar Eclipse when markets were becoming turbulent over speculation that Greece would have to get bailed out or be forced out of the EU. The square is a 90 degree aspect which can equate to 90 days of time. Despite all the hype about Thursday’s dramatic drop, the indices are still trading above where they were three months ago.
Mars made its third and final conjunction to the NYSE’s natal Uranus in Leo, repeating the previous bearish alignment made during the Solar Eclipse. (Mars/Uranus likes risk; the first alignment on November 23, 2009 was bullish as it was a “risk trade on” day.) In either extreme, this energy raises the potential for wild market gyrations.
And finally at the time of Thursday’s severe drop, the Moon was squaring the NYSE’s natal retrograde Mercury in Taurus and conjoining natal Pluto in Aquarius, creating anxiety that something massive was happening beyond anyone’s ability to control.
Fears about Greece began last October as Saturn entered Libra and squared Pluto, indicating that sovereign debt fears had become the latest act of the financial crisis. Markets should become accustomed to operating in a heightened period of volatility, especially over the next few months as Mars, Jupiter, Saturn, Uranus, and Pluto form challenging alignments to one another.
Uranus will be moving into Aries May 27 and Jupiter on June 6, and conjoin June 8. The unabashed enthusiasm of Jupiter and Uranus in Aries can bring large rapid spikes that occur suddenly. However, alignments of Jupiter/Uranus to Mars, Saturn, and Pluto can bring large market gyrations that unexpectedly break the enthusiasm. There could be several “firsts” related to percentage and point size movements.
Right now the markets are fearful about Greece, Portugal, Spain, and so on down the line in the EU. These countries are and will be affected by the transits I have just described. But so is the U.S. where a run up in Treasuries and junk bonds could become the next bubble to burst.
*This influence is similar in nature to an opposition.
**The Moon was in Aquarius in Greece until late this morning (May 7).